Redesigning Enterprise Processes e-Business Includes cd-RoM with Workflow BPR Process Modeling Software from holosofx nc Omar A El Sawy Marshall school of business University of Southern California McGraw-Hill Irwin Boston Burr Ridge, IL Dubuque, IA Madison, WI New York San Francisco St Louis Bangkok Bogota Caracas Lisbon London Madrid Mexico City Milan New Delhi Seoul Singapore Sydney Taipei Toronto
Redesigning Enterprise for e Dl I^IKI^^C^O -DUol 1600 Includes CD-ROM with WorkflowBPR Process Modeling Software from Holosofx Inc. Omar A. El Sawy Marshall School of Business University of Southern California McGraw-Hill Irwin Boston Burr Ridge, IL Dubuque, IA Madison, WI New York San Francisco St. Louis Bangkok Bogota Caracas Lisbon London Madrid Mexico City Milan New Delhi Seoul Singapore Sydney Taipei Toronto
CONTENTS PREFACE ACKNOWLEDGMENTS NAVIGATION GUIDE TO USING THIS BOOK PART A UNDERSTANDING BPR FOR e-BUSINESS 1 Introduction to BPR fore-Business 1-1: INTRODUCTION 1-1-1: What Is BPR? 1-1-2: What Is bPR for e-Business? 1-2: THE CONTEXT OF BPR FOR e-BUSINESS 8 1-2-1: The Leavitt Diamond: Understanding Organizational Adaptation 1-2-2: The Evolution of BPr 1-3: HOW DOES A BPR PROJECTWORK? 11 -3-1: The Phases of BPr"in the bIG 1 1-3-2: The Participants in a BPR Project 1-3-3: Cross-Enterprise BPR for e-Business 1-4: THE PROCESS REDESIGN PHASE OF BPR: A DESIGN FOCUS 1-5: REDESIGNING BUSINESS PROCESSES 1-5-1: The Properties of Business Processes 16 1-5-2: Three Generic IT-Enabled Ways for Redesigning Business processes 1-6: THE LEARNING BLOCKS OF BPR FORe-BUSINESS 2 Key Issues around BPR and the Evolution of BPR for e-Business 2-0. FIRST AND SECOND WAVES OF BPR 2-1: KEY ISSUES AROUND BPR: WHAT WE LEARNED FROM THE FIRST WAVE 2-1-1: The Scope, Success, and State of BPR 1-2: BPR Methodologies and Information Technologies 34 2-1-3: People Issues in BPR
CONTENTS PREFACE vii ACKNOWLEDGMENTS viii NAVIGATION GUIDE TO USING THIS BOOK x PART A UNDERSTANDING BPR FOR e-BUSINESS 1 1 Introduction to BPR for e-Business 3 1-1: INTRODUCTION 4 1-1-1: What Is BPR? 5 1-1-2: What Is BPR for e-Business? 7 1-2: THE CONTEXT OF BPR FOR e-BUSINESS 8 1-2-1: The Leavitt Diamond: Understanding Organizational Adaptation 8 1-2-2: The Evolution of BPR 9 1-3: HOW DOES A BPR PROJECT WORK? 11 1-3-1: The Phases of BPR "in the BIG" 12 1-3-2: The Participants in a BPR Project 13 1-3-3: Cross-Enterprise BPR for e-Business 14 1-4: THE PROCESS REDESIGN PHASE OF BPR: A DESIGN FOCUS 15 1-5: REDESIGNING BUSINESS PROCESSES 15 1-5-1: The Properties of Business Processes 16 1-5-2: Three Generic IT-Enabled Ways for Redesigning Business Processes 18 1-6: THE LEARNING BLOCKS OF BPR FOR e-BUSINESS 23 2 Key Issues around BPR and the Evolution of BPR for e-Business 25 2-0: FIRST AND SECOND WAVES OF BPR 26 2-1: KEY ISSUES AROUND BPR: WHAT WE LEARNED FROM THE FIRST WAVE 27 2-1-1: The Scope, Success, and State of BPR 27 2-1-2: BPR Methodologies and Information Technologies 34 2-1-3: People Issues in BPR 39 iii
V CONTENTS 2-2. BPR FOR e-BUSINESS: WHERE THE SECOND WAVE IS TAKING US 2-2-1: BPR and Supply Chain Management 44 2-2-2: BPR and Knowledge Management 2-2-3: BPR and Web-Enabled e-Business pRinciples and Tactics of Process Redesign for e-Business 3-1: THE e-BUSINESS SPEED LOOP FOR THE ENTERPRISE 3-2: REDESIGN PRINCIPLES AND TACTICS 3-2-1: Principles and Tactics for Restructuring and Reconfiguring Processes(Restructure It) 3-2-2: Principles and Tactics for Changing Information Flows around the Process(Informate It 3-2-3: Principles and Tactics for Changing Knowledge Management around the Process(Mind It) PART B HOW TO REDESIGN ENTERPRISE PROCESSES WITH BPR SOFTWARE 4 Scoping an Enterprise Process 4-0: READY TO LAUNCH? 4-1: OPERATIONALIZE PROCESS PERFORMANCE TARGETS 4-2: DEFINE PROCESS BOUNDARIES 4-3: IDENTIFY KEY PROCESS ISSUES 4-4: UNDERSTAND KNOWN BEST PRACTICES AND DEFINE INITIAL VISIONS 4-5: FAMILIARIZE PARTICIPANTS WITH BPR SOFTWARE 4-6: OUTLINE DATA COLLECTION PLAN AND COLLECT BASELINE DATA 4-7: PROCESS SCOPING REPORT 5 Foundations of Business Process Modeling and Analysis with BPR Software 105 5-1: WHY USE BPR SOFTWARE? 106 5-2: WHAT IS A BPR MODELING AND ANALYSIS METHOD? 5-3: THE SPECTRUM OF MODELING METHODS ADOPTED BY BPR SOFTWARE 110 5-4: UNDERSTANDING BPR MODELING AND ANALYSIS FOUNDATIONS 112 5-4-1: Building Block #1: Activity Decision Flow Diagrams -4-2: Building Block #2: Linking Resources to Activities 115 5-4-3: Building Block #3: Rules of Graphical Connection 116 5-4-4: Building Block #4: Activity Path Management Capabilities 5-4-5: Building Block #5: Process Performance Measu 5-5: RAMPING UP YOUR MODELING SKILLS 5-5-1: Taking Advantage of HoloSofx CD-ROM Help Files 134 5-5-2: Working through the Online Tutorial 5-5-3: Process Modeling Tips
IV CONTENTS 2-2: BPR FOR e-BUSINESS: WHERE THE SECOND WAVE IS TAKING US 44 2-2-1: BPR and Supply Chain Management 44 2-2-2: BPR and Knowledge Management 47 2-2-3: BPR and Web-Enabled e-Business 50 3 Principles and Tactics of Process Redesign for e-Business 54 3-1: THE e-BUSINESS SPEED LOOP FOR THE ENTERPRISE 54 3-2: REDESIGN PRINCIPLES AND TACTICS 56 3-2-1: Principles and Tactics for Restructuring and Reconfiguring Processes (Restructure It) 57 3-2-2: Principles and Tactics for Changing Information Flows around the Process (Informate It) 65 3-2-3: Principles and Tactics for Changing Knowledge Management around the Process (Mind It) 70 PART B HOW TO REDESIGN ENTERPRISE PROCESSES WITH BPR SOFTWARE 77 4 Scoping an Enterprise Process 79 4-0: READY TO LAUNCH? 79 4-1: OPERATIONALIZE PROCESS PERFORMANCE TARGETS 82 4-2: DEFINE PROCESS BOUNDARIES 86 4-3: IDENTIFY KEY PROCESS ISSUES 89 4-4: UNDERSTAND KNOWN BEST PRACTICES AND DEFINE INITIAL VISIONS 96 4-5: FAMILIARIZE PARTICIPANTS WITH BPR SOFTWARE 98 4-6: OUTLINE DATA COLLECTION PLAN AND COLLECT BASELINE DATA 100 4-7: PROCESS SCOPING REPORT 103 5 Foundations of Business Process Modeling and Analysis with BPR Software 105 5-1: WHY USE BPR SOFTWARE? 106 5-2: WHAT IS A BPR MODELING AND ANALYSIS METHOD? 108 5-3: THE SPECTRUM OF MODELING METHODS ADOPTED BY BPR SOFTWARE 110 5-4: UNDERSTANDING BPR MODELING AND ANALYSIS FOUNDATIONS 112 5-4-1: Building Block #1: Activity Decision Flow Diagrams 112 5-4-2: Building Block #2: Linking Resources to Activities 115 5-4-3: Building Block #3: Rules of Graphical Connection 116 5-4-4: Building Block #4: Activity Path Management Capabilities 127 5-4-5: Building Block #5: Process Performance Measurement 131 5-5: RAMPING UP YOUR MODELING SKILLS 134 5-5-1: Taking Advantage of HoloSofx CD-ROM Help Files 134 5-5-2: Working through the Online Tutorial 135 5-5-3: Process Modeling Tips 136
CONTENTS V 6 Analysis and Redesign of an Enterprise Process 137 6-0: ANALYSIS AND REDESIGN ACTIVITIES 6-1: REDESIGNING THE CUSTOMER SERVICE PROCESS AT ZYCO INSURANCE 138 6-1-1: Skeletal Storyline and Process Scoping 138 6-1-2: Modeling the As-Is Baseline Proces 6-1-3: Analysis and Diagnosis of the As-Is Baseline Process 6-1-4: Analysis and Redesign of the To-Be Process 148 6-1-5: Comparing As-Is and To-Be Processes 54 6-1-6: Analysis of What-lf Scenarios Through Simulation 6-1-7: Partner Impact and Process Reengineering Reports 163 7 Designing Collaborative Supply Chain Processes for e-Business 167 7-1: UNDERSTANDING MISALIGNMENTS AND COLLABORATIVE OPPORTUNITIES IN SUPPLY CHAINS 168 7-2. REDESIGNING SUPPLY CHAIN PROCESSES: REENGINEERING FROM THE 172 7-3: ROSETTANET EXAMPLE: NING e-BUSINESS PARTNER INTERFACE PROCESSES FOR THE IT-INDUSTRY SUPPLY CHAIN 174 7-3-1: Understanding the Process Structure of a Supply Chain 177 7-3-2: Designing e-Business PIPs for a Supply Chain Process 178 8 IT Integration Options for e-Business Processes 187 8-1: PLANNING PROCESS INTEGRATION: PREAMBLE TO IMPLEMENTATION 8-2: THE EVOLVING SPECTRUM OF IT PLATFORMS FOR PROCESS INTEGRATION 8-2-1: Custom Application Development 191 8-2-2: Workflow Engines 191 8-2-3: Enterprise Application Integration 192 8-2-4: Specialized e-Process Automation Software 8-2-5: XML-Based Process Integration Suites for e-Business 194 8-3: KEEPING BPR IN PERSPECTIVE THE CHALLENGE OF ORGANIZATIONAL TRANSFORMATION FOR e-BUSINESS APPENDIX NSTALLING THE HOLOSOFX WORKFLOW BPR MODELER SOF TWARE
CONTENTS 6 Analysis and Redesign of an Enterprise Process 137 6-0: ANALYSIS AND REDESIGN ACTIVITIES 137 6-1: REDESIGNING THE CUSTOMER SERVICE PROCESS AT ZYCO INSURANCE 138 6-1—1: Skeletal Storyline and Process Scoping 138 6—1—2: Modeling the As-ls Baseline Process 141 6—1-3: Analysis and Diagnosis of the As-ls Baseline Process 143 6—1—4: Analysis and Redesign of the To-Be Process 148 6—1—5: Comparing As-ls and To-Be Processes 154 6-1—6: Analysis of What-lf Scenarios Through Simulation 155 6—1—7: Partner Impact and Process Reengineering Reports 163 7 Designing Collaborative Supply Chain Processes for e-Business 167 7-1: UNDERSTANDING MISALIGNMENTS AND COLLABORATIVE OPPORTUNITIES IN SUPPLY CHAINS 168 7-2: REDESIGNING SUPPLY CHAIN PROCESSES: REENGINEERING FROM THE OUTSIDE-IN 172 7-3: ROSETTANET EXAMPLE: DESIGNING e-BUSINESS PARTNER INTERFACE PROCESSES FOR THE IT-INDUSTRY SUPPLY CHAIN 174 7—3—1: Understanding the Process Structure of a Supply Chain 177 7-3—2: Designing e-Business PIPs for a Supply Chain Process 178 8 IT Integration Options for e-Business Processes 187 8-1: PLANNING PROCESS INTEGRATION: PREAMBLE TO IMPLEMENTATION 188 8-2: THE EVOLVING SPECTRUM OF IT PLATFORMS FOR PROCESS INTEGRATION 19O 8—2—1: Custom Application Development 191 8-2-2: Workflow Engines 191 8—2-3: Enterprise Application Integration 192 8—2-4: Specialized e-Process Automation Software 193 8—2—5: XML-Based Process Integration Suites for e-Business 194 8-3: KEEPING BPR IN PERSPECTIVE: THE CHALLENGE OF ORGANIZATIONAL TRANSFORMATION FOR e-BUSINESS 199 APPENDIX 201 INSTALLING THE HOLOSOFX WORKFLOW.BPR MODELER SOFTWARE 202 INDEX 203
PREFACE PREFACE This is the decade of redesigning enterprise processes for e-business. While creating a process advantage has always been a formidable strategic weapon for business enter prises, a new urgency for a different form of business process redesign or reengineer ing(BPR) has been ignited by e-business At this writing I cannot imagine any career in line management that will not require basic skills in BPR for e-business. Whether you are in a start-up that is trying to design new marketing processes around the Internet, or in a large traditional brick-and-mortar enterprise that is redoing its supply chain for e-business, or in a Big 5 consulting com- pany with an electronic commerce practice, or in a nonprofit company that is restruc turing web-based customer service, or whether you work in Stockholm or Singapore you will definitely need skills in BPR for e-business. The career advancement opportu- nities that it opens are endless As we enter the 2lst century, the rapid progress in the capabilities of the Internet and information technology infrastructures are enabling enterprises to create value in new and exciting ways. In this customer-centered high velocity environment an enterprise's business processes must be fast, focused, and flexible. Business-to-business electronic commerce is coming together with physical supply chain management and is coalescing into an information-rich combination called e-business. moreover the focus of business process redesign has shifted to include cross-enterprise processes partly executed by one nterprise and partly by another Competitive pressures and value creation opportunities have never been greater for enterprises to redesign their business processes In such an environment, business professionals need to learn how to describe, lyze, diagnose, and redesign a business process through robust BPR methodologies tools. In an era of e-business, redesigning a business process involves more than re- structuring the workflow. It also involves changing the information flows around the usiness process and changing the knowledge management capabilities of the process by harnessing the collective intellectual assets around it. This book is targeted to the practicing or future business professional who would like to learn how to carry out such BPR in e-business settings
PREFACE PREFACE This is the decade of redesigning enterprise processes for e-business. While creating a process advantage has always been a formidable strategic weapon for business enterprises, a new urgency for a different form of business process redesign or reengineering (BPR) has been ignited by e-business. At this writing I cannot imagine any career in line management that will not require basic skills in BPR for e-business. Whether you are in a start-up that is trying to design new marketing processes around the Internet, or in a large traditional brick-and-mortar enterprise that is redoing its supply chain for e-business, or in a Big 5 consulting company with an electronic commerce practice, or in a nonprofit company that is restructuring web-based customer service, or whether you work in Stockholm or Singapore, you will definitely need skills in BPR for e-business. The career advancement opportunities that it opens are endless. As we enter the 21st century, the rapid progress in the capabilities of the Internet and information technology infrastructures are enabling enterprises to create value in new and exciting ways. In this customer-centered high velocity environment an enterprise's business processes must be fast, focused, and flexible. Business-to-business electronic commerce is coming together with physical supply chain management and is coalescing into an information-rich combination called e-business. Moreover, the focus of business process redesign has shifted to include cross-enterprise processes partly executed by one enterprise and partly by another. Competitive pressures and value creation opportunities have never been greater for enterprises to redesign their business processes. In such an environment, business professionals need to learn how to describe, analyze, diagnose, and redesign a business process through robust BPR methodologies and tools. In an era of e-business, redesigning a business process involves more than restructuring the workflow. It also involves changing the information flows around the business process and changing the knowledge management capabilities of the process by harnessing the collective intellectual assets around it. This book is targeted to the practicing or future business professional who would like to learn how to carry out such BPR in e-business settings. vii